[1] Reversion of the burden of proving and proving the fact that the third party is maliciously guilty (=person who asserts the invalidity of false representation)

[2] Whether it should be free of charge to constitute a third party acting in good faith under Article 108(2) of the Civil Code (negative)

[3] The meaning of the principle of trust and good faith and the requirements to deny the exercise of rights on grounds of violation

[4] Where a guarantor asserts that he/she does not bear the guaranteed obligation against the creditor even though he/she was able to do so, and he/she fully performs the guaranteed obligation without claiming it, whether he/she may claim the amount of indemnity against the joint guarantor of the claim for indemnity due to the performance of the guaranteed obligation within the scope of his/her assertion (negative)

[1] Article 108(1) of the Civil Act provides that a false declaration of intent made in collusion with the other party shall be invalidated, and Article 108(2) provides that the invalidation of such declaration of intent shall not be asserted against a third party acting in good faith. Here, the third party is presumed in good faith unless there are special circumstances. Therefore, the third party is liable to assert and prove the fact that it is bad faith.

[2] A third party in a false representation in conspiracy under Article 108(2) of the Civil Code shall not be considered whether the third party has acted in good faith or not, nor shall it be considered whether there is negligence with regard thereto.

[3] The exercise of rights shall be in accordance with the principle of trust and good faith (Article 2 of the Civil Act); and the parties to legal relations shall not exercise their rights in a way contrary to the principle of trust and good faith, taking into account the other party’s interests; and in a case where the exercise of rights is in a situation that is not acceptable in light of the concept of justice, the exercise of rights may be denied

[4] Even though the guarantor could have asserted that he did not bear the guaranteed obligation against the creditor, if he met the entire guaranteed obligation without claiming it, he cannot claim the amount of the indemnity against the joint guarantor for the claim for indemnity due to the performance of the guaranteed obligation under the good faith principle to the extent that he can assert it.

[1] Article 108 of the Civil Code/ [2] Article 108 of the Civil Code/ [3] Article 2 of the Civil Code/ [4] Article 2 of the Civil Code

[1] Supreme Court Decision 70Da466 delivered on September 29, 1970 (No. 18-3, 94) 77Da907 delivered on December 26, 1978, 2003Da5078, 508 delivered on December 26, 200 / [2] Supreme Court Decision 9Da51258 delivered on July 6, 200 (Gong200Ha, 1861 delivered on May 28, 200), Supreme Court Decision 203Da7041 delivered on May 29, 200 (Gong204, 104, 1069) / [3] Supreme Court Decision 9Da305314 delivered on January 24, 2007, Supreme Court Decision 205Da30979 delivered on May 28, 2004) / [3] Supreme Court Decision 2005Da31947381 delivered on May 294, 297, 205.

Plaintiff Financial Cooperative (Attorney Kim Jong-soo, Counsel for plaintiff-appellee)

Defendant Mutual Aid Association (Attorney Kim Jong-soo, Counsel for defendant-appellee)

Supreme Court Decision 99Da51258 delivered on July 6, 2000

Seoul High Court Decision 2000Na37090 delivered on November 21, 2001

The judgment below is reversed, and the case is remanded to Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. We examine the second ground for appeal.

Article 108(1) of the Civil Act provides that a false declaration of intent made in collusion with the other party shall be null and void, and Article 108(2) provides that the invalidation of such declaration of intent shall not be set up against a bona fide third party, barring any special circumstance. The third party is presumed to be in good faith, and thus the third party is liable to assert or prove the fact that the third party is malicious. (See Supreme Court Decisions 70Da466 delivered on September 29, 197, 77Da907 delivered on December 26, 197, 2003Da5078, 5088, 5085 delivered on December 26, 2003, etc.). The judgment of the court below to the same purport is correct, and it is not acceptable to the grounds of appeal that a third party bears the burden of proof as to his good faith.

2. Of the grounds of appeal No. 1, we examine the part concerning the misapprehension of legal principles as to good faith and negligence of a third party as stipulated in Article 108(2) of the Civil Act.

The judgment of the court below to the same purport is justified, and it does not accept the grounds of appeal that a third party's good faith or negligence is required in addition to the good faith in other opinions, as stipulated in Article 108 (2) of the Civil Code, since the good faith or negligence is not determined (see Supreme Court Decision 2003Da70041 delivered on May 28, 2004).

3. Of the grounds of appeal No. 1, we examine the part concerning the defendant's alleged violation of the rules of evidence.

According to the facts admitted by the court below and the records of this case, it is proper to find the fact of the court below that the defendant did not know that the defendant's act of bearing the burden of paying advance payment guarantee (hereinafter "the letter of guarantee of this case") to the non-party 1 corporation was caused by false representation when he issued the letter of advance payment guarantee to the non-party 1 corporation, and then (title omitted), medical center (representative: non-party 2), the contract for the repair works of hospital and the installation works of machinery (hereinafter "contract for the construction of this case") and the non-party 1 corporation's act of bearing the burden of paying advance payment guarantee to the non-party

4. Of the grounds of appeal No. 1, we examine the violation of the rules of evidence and misapprehension of the legal principles as to the violation of the good faith principle.

A. The exercise of the right shall be in accordance with the principle of trust and good faith (Article 2 of the Civil Act); the parties to legal relations shall not exercise the right in a way contrary to the principle of trust and good faith, taking into account the other party’s interest; in a case where the exercise of the right is in a situation that is not acceptable in light of the concept of justice, the exercise of the right may be denied pursuant to the principle of trust and good faith (see Supreme Court Decision 2000Da13856, Mar. 15, 2002). In a case where the guarantor may assert that he does not bear the guarantee obligation against the obligee even though he did not make such assertion, if he performed the entire guarantee obligation, he may not claim compensation against the joint guarantor for the claim for the indemnity due to the performance of the guarantee obligation under the principle of trust and good faith (see Supreme Court Decisions 94Da20174, Jun. 29, 195; 2002Da32820, Sept. 24, 2002).

B. According to the facts acknowledged by the court below and the records of this case, the following circumstances are recognized.

(1) The instant construction agreement and the fraud by Nonparty 2 and 3

(6)The medical center is the company that manages (name omitted) the building of the hospital and the facilities, and the non-party 2 and the non-party 3 (the vice president of the non-party 1 corporation is concurrently holding office) who is the representative director of the non-party 1 corporation to secure the claim for return of investment when the (name omitted) medical center and the non-party 1 corporation agreed to invest funds in the non-party 1 corporation. The contract was concluded between the non-party 1 corporation and the non-party 1 corporation, or the advance payment was made pursuant to the contract of the construction of this case. The contract was concluded and the advance payment was made. The non-party 1 corporation would be entitled to receive advance payment guarantee from the defendant 6 billion won who is affiliated with the non-party 1 corporation, and the non-party 1 corporation would be entitled to receive advance payment guarantee from the non-party 1 corporation on May 24, 1995. The non-party 1 corporation would be entitled to advance payment guarantee of KRW 600,000,00,000.

On November 13, 1998, Nonparty 2 and Nonparty 3 were convicted of imprisonment with prison labor for each of the two-year cases of violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Fraud) with the Seoul Central District Court (Case Number omitted) on the above criminal facts. Therefore, the contents of the construction contract of this case are false and are also invalid as a false declaration of conspiracy.

(2) Details of the relevant documents and defects

(A) (Name omitted) Medical Center (Name omitted) concluded a contract for the construction of the main building of the hospital to the non-party 5 corporation for the construction cost of KRW 1.1 billion. The contract for the construction of the instant building submitted to the Defendant by the ordering person (name omitted), the medical center, the contractor’s (name omitted), the repair and installation of machinery and equipment works by the name of the subcontractor, the contractor’s (name omitted) medical center, the subcontractor’s (name omitted), and the subcontractor’s non-party 1 corporation. As such, the subcontract for the instant subcontracted project connected to the construction of the main building is different from the contractor for the new construction of the main building, and it is difficult to view that the subcontractor of the instant subcontracted project is the same as the contractor for the construction of the main building.

(B) Although the construction cost of the instant subcontracted building was 1.1 billion won, it cannot be deemed as an agreement for normal construction cost, given that the construction cost of the instant subcontracted building is higher than 1.32 billion won, which is part of the repair of the building and the installation of machinery and machinery of the instant subcontracted building.

(C) The non-party 1 corporation has only specialized construction licenses for facilities and water supply and sewerage systems. The construction agreement of this case includes elevator construction and removal works that do not belong to the construction license of the non-party 1 corporation.

(D) The construction cost of the instant construction subcontract is KRW 1.32 billion, but this is not calculated by detailed design drawings, etc., and is a outlined content alone.

(E) The written subcontract of the instant construction project is that (name omitted) medical center pays an advance payment of KRW 660 million on the date of the conclusion of the instant subcontract of the construction project, and the balance shall be paid within one month after the completion of the construction work. However, Article 23(2) of the terms and conditions of the subcontract of the construction project attached to the contract stipulates that the contractor shall provide a guarantee for payment guarantee and a guarantee insurance policy if the contractor is required to receive advance payment. In the case of a specialized construction project ordered by the non-governmental entity, other than the State, the contractor does not have any obligation to pay advance payment, and it does not exceed 10% or 20% of the contract amount even if the advance payment is required to be made. Accordingly, it constitutes this case’s provision that advance payment should be made on the date of the conclusion of the instant subcontract of construction project and that advance payment should be made more than 50% of the contract amount.

(3) Violation of relevant regulations or practices in the course of issuing the instant letter of guarantee

When the Defendant issues the instant guarantee certificate, it is required to obtain “written consent from the applicant (members) for the issuance of the letter of guarantee from the agreed joint guarantor” in the prescribed form, and there is either prescribed by the Enforcement Rule of the Guarantee Regulations or business practice of the Defendant. Nevertheless, in issuing the instant guarantee certificate, it is not submitted to the Defendant that the Defendant received written consent from Nonparty 6, Nonparty 7, and Nonparty 8 (hereinafter “stock company”) who is the joint guarantor of the indemnity obligation, and the said three companies received written consent for the issuance of the letter of guarantee from the said three companies.

(4) Fruits in the process of paying deposits

(A) On June 30, 1995, the medical center requested the Defendant to pay the deposit amount on July 5, 1995 when the non-party 1 corporation defaulted. The defendant's employee conducted an investigation on July 25, 1995, and prepared and submitted a letter of business trip stating that "(title omitted) building was being newly constructed, but the size of the building was narrow and planned to change the internal structure of the building to be used as a separate house, and the non-party 1 corporation was not in the state of non-party 1 corporation's non-party 1's non-party 1 corporation's non-party 1's non-party 1 corporation's non-party 1 corporation's non-party 1 corporation's non-party 1 corporation's non-party 1 corporation's non-party 1 corporation's non-party 1 corporation's non-party 1 corporation's non-party 1 corporation's non-party 1 corporation's non-party 1 corporation's non-party 1 corporation's non-party 2.

(B) In a case where a joint and several sureties raises an objection pursuant to Article 3(1)2 of the Regulations on Follow-Up Management of Guarantee Business, the Defendant is required to investigate and confirm whether it is justifiable and determine whether to pay a security deposit. In addition, where a joint and several sureties raises an objection, there are many cases where the Defendant decides whether to pay a security deposit by having the creditor of the security deposit file a lawsuit

However, on July 5, 1995, immediately after the date when the medical center requested the payment of the deposit, Nonparty 6 Co., Ltd. (name omitted) and immediately after July 5, 1995, it is null and void by using the form of the subcontract even though the original contract was the original contract. Reference to the detailed statement is not the original contract. 50% advance payment cannot be paid, and it is deemed that there is a deposit with Nonparty 2. Nonparty 6 Co., Ltd. did not agree to guarantee that only matters within the good faith and common sense range are within the payment period. Nonparty 6 Co., Ltd., even though the guarantee agreement was made, should be seen as having paid advance payment of KRW 50%. Nonparty 6 Co., Ltd., which was the date of the above request for payment of the deposit. Nonparty 6 Co., Ltd., without the name of the installation and construction contract and the vice president of the construction contract, and Nonparty 1 Co., Ltd., Ltd., which was the contractor’s new construction and the construction agreement of this case.

(C) (Name omitted) Medical Center submitted to the Defendant as documentary evidence of the payment of advance payment on November 2, 1995 (record 458 pages) the pertinent documents, such as receipts, etc. (title omitted) submitted by Medical Center to the Defendant as documentary evidence (record 458 pages) are that the advance payment was made in cash and the remainder of KRW 400 million shall be paid with a promissory note with ten (10) days after the due date. This does not coincide with the agreement to pay advance payment on the date of the contract. In addition, since there was an objection as to the authenticity of the payment of the subcontract and advance payment of the instant construction project, the Defendant submitted documentary evidence on the source and flow of the specific fund and investigated the relevant financial institution in order to verify whether the promissorysory note was issued and settled, as described in the relevant documents, and did not actively conduct such investigation.

(D) On August 195, Non-party 6 and Non-party 7 corporation filed a petition with the Seoul District Public Prosecutor's Office to punish Non-party 2 et al. for unjust enrichment by obtaining the guarantee of this case from the defendant based on the false contract. However, on October 25, 1995, the charge was processed without charge on the ground that there was no evidence of the result of internal investigation on October 25, 1995. Accordingly, Non-party 2 requested a prompt payment of the deposit to the defendant. On December 11, 1995, the Minister of Construction and Transportation issued a warning to the defendant on the ground that the failure to pay the deposit for the reason of the subsequent demand for reimbursement against the joint guarantor was a waiver of the duty of the defendant association and caused a civil petition, and the defendant paid the deposit to the non-party 2 within the prompt time limit unless there is any special reason, and on December 12, 195, the defendant paid 60 million won to the non-party 2.

(E) However, on January 22, 1996 and on September 23, 1996, the Board of Audit and Inspection conducted an audit on the Defendant, and sent a written request for disposition of audit results to the Defendant on September 30, 1996. The content of the case is clear that Nonparty 6 did not receive advance payment for the execution of normal construction work, based on the grounds for objection and the investigation conducted by the Defendant’s employees, etc. In this case, it was issued with the instant guarantee certificate and pointed out that the payment was made unfairly, and ordered Nonparty 2 to file an accusation against the Defendant, and to thoroughly issue the guarantee issuance work. Accordingly, the Defendant’s complaint against Nonparty 2 and Nonparty 3 was found guilty as provided in the above (1).

(5) The non-existence of the guaranteed obligation of the non-party 6 corporation against the defendant in the lawsuit

Before the filing of the instant lawsuit, Nonparty 6 Co., Ltd. filed a lawsuit against the Defendant for confirmation of the existence of an obligation against the Defendant, “No liability for indemnity against the Defendant of Nonparty 6 Co., Ltd. in relation to the guarantee of advance payment for the instant letter of guarantee shall exist” in Seoul Central District Court 96Da30422, and the Plaintiff participated in the lawsuit for confirmation of existence of an obligation. The judgment against the Defendant was rendered and finalized on May 29, 198.

C. Comprehensively taking account of the aforementioned facts, ① the instant subcontract agreement was false and its obligation to return advance payment was not created, so if the Defendant alleged the above facts, it could refuse to claim the payment of the said deposit from the medical center (title omitted) and thus, the guaranteed liability of the non-party 1 company did not occur. ② The Defendant is an expert in the business of concluding the guarantee agreement or paying the advance payment deposit, as it consists of members of the construction business and was established with the performance guarantee for the contracted construction business as its business purpose. However, if the Defendant reviewed the documents submitted prior to the issuance of the instant guarantee bond, it seems that the Defendant could have a considerable doubt as to the contents of the instant subcontract and the authenticity of the advance payment. In addition, even if it was found that the Defendant did not have been able to claim the payment of the advance payment guarantee from the medical center, it was possible for the Defendant to know the progress of the instant construction project and the actual performance thereof through investigation, and it was also possible for the Defendant to pay the said advance payment based on the fact that it was found that the Defendant did not exercise its right to demand for reimbursement.

In addition, although the first sentence of Article 8(1) of the Clause of Advance Payment Guarantee (Records 297 pages) of the Guarantee Agreement provides that "the Corporation shall have the right to indemnity against the debtor when the Corporation has paid the deposit," it shall be in principle that the trustee who has paid the deposit shall pay the deposit without negligence in order to cause the right to indemnity to the guarantor who has paid the deposit pursuant to Article 441(1) of the Civil Act, and in particular, as seen earlier, the defendant is in a position to make more accurate judgment as to the existence of the obligation to pay the deposit as to the Guarantee in this case compared to the third company as an expert in the business related to the conclusion of the Guarantee Agreement or the payment of the deposit, as seen above, compared to the third company as an expert in the business related to the execution of the Guarantee Agreement and the payment of the deposit, and further, the third company and the non-party 6 or the non-party 7 corporation raised an objection to the defendant by opposing the obligation to pay the deposit in this case from the third company in the process of issuing the Guarantee in this case.

Therefore, even though the Defendant, the guarantor, was able to assert that the Defendant did not bear all the obligation to pay to the obligee (title omitted) medical center, the obligee, to the extent that he could have asserted in the instant case in which he performed the obligation to pay without claiming it by gross negligence, he cannot claim a reimbursement for the claim for the amount of reimbursement due to the payment of the deposit under the good faith principle against the third party who is the joint guarantor, and the claim for reimbursement cannot be asserted to the Plaintiff that there exists the claim for reimbursement.

D. Therefore, even if the Defendant was negligent in not knowing the circumstances where the subcontract agreement of the construction in this case was not duly formed, it cannot be said that the exercise of the right to indemnity against the third party of the guarantee is contrary to the good faith principle. In so determining, the court below erred by misapprehending the facts against the rules of evidence or by misapprehending the legal principles on the good faith principle

5. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Young-ran (Presiding Justice)